Section 2: Arguments for and against MIC2025 in the Chinese debate
8 Appendices
8.1 Overview of the IP-instruments based on (Naudé, 2010)
8.2 Objectives and targets of MIC2025
Objectives and targets of MIC2025 based on the summary of Roadmap15 done by U.S. Chamber of Commerce (2017, pp. 65–80).
Compiled and updated by author based on own translation according to the new goals set out in Roadmap17 (NMSAC, 2018).
Industry 2020 goals 2025 goals, unless stated “2030” Strategic support and
guarantee
Next-generation information technology
§ Minimize the gap between Chinese IC industry and international levels.
§ Reach yearly IC industry sales growth of 20%
§ 16/14nm IC chips to reach scale production
§ Create a safe and reliable IC industry with advanced technology.
§ Domestic production (not including Taiwanese companies) of mobile telecommunication system equipment, mobile terminals, mobile terminal chips to reach 75%, 75%, and 35%, respectively, of the domestic market, international market share is expected to be 35%, 25%, and 15%
respectively.
§ Domestic production of routers and switches is expected to reach 20% international market share.
§ International market share for domestically produced high-performance computers and servers will reach 30%, and the domestic market share will reach 60%.
§ Domestically produced basic software to reach 50% market share
§ 2030: IC industry chain to reach advanced international levels.
§ Domestic production of mobile telecommunication system equipment, mobile terminals, mobile terminal chips to reach 80%, 80%, and 40%, respectively, of the domestic market
§ Domestic production of mobile telecommunication system equipment, mobile terminals, mobile terminal chips international market share is expected to be 40%, 45%, and 20% respectively.
§ Domestic production of optical communication equipment expected to reach 60% market share.
§ International market share for domestically
produced high-performance computers and servers will reach 40%, and the domestic market share will reach 80%.
§ Domestically made high-end servers will exceed 50% of the domestic market
§ Use of domestically produced branded servers for CPUs reach above 30% of the domestic market
§ “Internet Plus” smart industrial cloud has usage rates exceeding 60% market share in major industries.
§ Expand the scale of the National IC Industry Investment Fund
§ Strengthen policy and resource coordination
§ Encourage strong companies to lead setting international standards.
§ Establish national testing and a standards certification system for operating systems and industrial software.
§ Encourage strong companies to lead setting international standards.
§ Establish national testing and a standards certification system for operating systems and industrial software.
§ Establish a national laboratory for core informational
equipment for smart manufacturing.
High-end numerical control machinery and robotics
§ High-end computerized numerical control machine tools and basic manufacturing
equipment to exceed 70% of the domestic market
§ Computerized numerical control system standard and intelligence to reach 60% and 10% of the
§ High-end computerized numerical control machine tools and basic manufacturing equipment to exceed 80% of the domestic market
§ Computerized numerical control system standard and intelligence to reach 80% and 30% of the
§ Create national innovation centres for advanced industrial design and CNC machine tools.
§ Prepare a plan for robotics
high-grade component capability to reach 50% of domestic market share.
§ Indigenous brands of industrial robots to reach 50% market share for the domestic market (NMSAC, 2018, p. 57).
§ Domestically produced critical components to reach 50% of the domestic market (NMSAC, 2018, p. 57).
§ Product MTBF to reach 80,000 hours
§ Develop 2-3 companies with yearly production above 10,000 units
§ Create 5-8 robotics industry clusters.
grade component capability to reach 80% of domestic market share.
§ Indigenous industrial robotic brands to reach over 70% market share domestically (NMSAC, 2018, p.
57).
§ Domestically produced core components to reach 70% market share domestically (NMSAC, 2018, p.
57).
§ Main technical indicators for products to reach foreign levels, and MTBF to reach internationally advanced levels
§ have 1-2 companies enter the top 5 companies.
capabilities of robotics and establishes indigenous brands.
§ Companies that help lead, contribute breakthroughs, or reach targets will be
rewarded.
§ Innovation and testing centres will also be created to
promote certification of reliable and safe robots.
Aerospace and aviation equipment
§ Operating revenues for the civil aircraft industry will exceed RMB 100 billion;
§ Complete development, production, and delivery of 150-seat single-aisle main-line aircraft;
§ Main-line aircraft delivery should be above 5%
of the total domestic market,
§ Turboprop branch-line airplane delivery should be 5-10% of the total international market,
§ General airplane and helicopter delivery to reach 20% and 10% of the international market.
§ Complete a CJ-1000A model;
§ Complete a 1,000kgf level turbofan and a 1,000kW level turbofan demonstration and development model;
§ Establish a long-term, stable, high-quality, and trustworthy aviation material and component supporting system and complete industrial chain.
§ reach a self- sufficient rate of over 60% for special information applications and form a more perfected satellite application industry chain.
§
§ Operating revenues for the civil aircraft industry will exceed RMB 200 billion;
§ Complete development, production, and delivery of 280-seat double-aisle main-line aircraft;
§ Main-line aircraft delivery should be above 10% of the total domestic market,
§ Turboprop branch-line airplane delivery should be 10-20% of the total international market,
§ General airplane and helicopter delivery to reach 40% and 15% of the international market.
§ Commercial service of the CJ-1000A;
§ Complete airworthiness certification for the 1,000kgf level turbofan, the 1,000kW level turbofan, and other major products;
§ complete model development of the 5,000kW level turboprop.
§ Achieve the first indigenously developed advanced large-scale civil turbofan for domestic commercial service
§ Achieve 30% market share domestically for regional aircraft airborne products;
§ General aircraft airborne products to have 50%
market share
§ Formulate an airplane development plan and accompanying policies to increase the promotion of domestic production of the airplane industry.
§ Carry out special supportive policies for domestic production of special equipment R&D.
§ Promote the development of indigenously innovated aviation engines.
§ Establish a national laboratory for airborne equipment and systems.
§
Maritime engineering equipment and high-tech maritime vessel
manufacturing
§ Indigenous design and construction of maritime construction equipment and high-tech ships to reach 35% and 40% of the international market, respectively;
§ marine construction equipment and high-tech ship critical system and equipment to reach 40%
and 60%, respectively, self-supporting rate;
§ Form the R&D base for domestic offshore oil exploration equipment technology;
§ Basically, achieve self-supporting ability for core equipment for marine engineering below-water equipment as well as for 500 meter below-water production systems and specialized system production and testing capability
§ Have more than 5 internally recognized manufacturing companies, and some areas be international leaders in design and manufacturing;
§ Indigenous research, design, and construction of main marine construction equipment and high-tech ships to reach 40% and 50% domestic market share, respectively;
§ Self-supporting rate for core systems and equipment to reach 50% and 80%, respectively;
§ Realize complete self- supporting ability for core equipment for marine engineering above water equipment as well as for 1,500 meter below-water production systems and specialized system production and testing capability,
§ Have production capability for extraction equipment for marine mineral resources and national gas hydrate, wave/tidal energy and other marine renewable resource development equipment
§ Speed up the construction of indigenous innovation capabilities for deep ocean construction equipment.
Advanced rail equipment
§ Research capabilities for rail transportation equipment and leading products to reach internally advanced levels,
§ Industry sales to exceed RMB 650 billion,
§ Overseas business to account for over 30% of total sales, and the service industry to account for over 15%
§ Major products to enter the EU, U.S., and other developed markets.
§ China is to form a complete rail transportation equipment manufacturing industry, possessing an innovation system that has continuous innovation,
§ In main areas promotes smart manufacturing, main products reaching internationally advanced levels
§ Overseas business to account for 40% and the service industry to account for over 20%,
§ Leading revisions to international standards,
§ Construct an internationally leading modern rail transport equipment industry system, and
accounting for the high-end global industry chain.
Energy-saving vehicles and new energy vehicles
§ By 2020, form market-driven, enterprise-focused and research-based energy-efficient vehicle manufacturing system.
§ Indigenous products should reach 40% of the market;
§ Form new independent and controllable energy-efficient vehicle industrial chain,
§ Indigenous products to reach 50% of the market;
§ Fuel consumption standards for commercial- use vehicles to reach advanced international standards,
§ Increase support for research of critical core technologies,
§ Support creation of NEV technology innovation alliance,
international standards,
§ Domestically produced key parts should surpass 70% of the market;
§ Average fuel consumption of passenger-use vehicles should be better than 5L/100km,
§ Domestically produced key parts should surpass 50% of the market;
§ Have popular car types and popular car companies
§ 5 enterprises with sales of energy-efficient vehicles in the top 10.
§ Indigenous products pp100 quality standard is equal to that of joint venture branded products.
§ Indigenous NEV annual production should exceed 1 million units (2 million according to Roadmap17)
§ Have more than 70% of the market;
§ produce popular car types that enter into the top 10 of global sales,
§ NEV passenger vehicles exports should achieve economies of scale,
§ MTBF vehicle mileage to reach 20,000 km;
§ Power battery, motor, and other critical system should be at advanced international levels and should have 80% of the Chinese market.
§ Average fuel consumption of passenger-use vehicles should be better than 4L/100km,
§ Domestically produced key parts should surpass 60% of the market;
§ 3 enterprises with sales of energy-efficient vehicles in the top 5,
§ Indigenous key products to reach 60% or the market, have energy-efficient commercial vehicles that have internationally advanced levels.
§ 3 million annual production of NEVs on par with advanced international standards (NMSAC, 2018).
§ Indigenous NEVs to reach over 90% of the market;
§ Product technology standards should be on par with global standards,
§ Have 2 NEV enterprises that are in top 10 of global sales of first- class car companies,
§ Foreign sales should be 10% of total sales;
§ Increase infrastructure for battery charging stations and hydrogen refuelling stations.
§ Create cooperative
development mechanism for NEV and smart car, smart grid, smart cities
infrastructure, as well as coordinated development mechanism for critical parts and materials.
§ Establishment of a national smart car common technology research institute and
innovation centre
§ Perfect the legal and regulatory system related to smart cars.
Electrical equipment
§ Advanced power equipment industry scale to reach 100 million kW annually,
§ Overall technical levels to reach internationally advanced levels, enter into ranks of global leaders.
§ Domestically produced power equipment to reach 90% of the domestic market, and the proportion of exports to reach 30% of annual production.
§ Power transmission output value to reach RMB 2.2 billion;
§ Create 3 global enterprises with capital, scale, technology, quality, brand advantages, and core competiveness.
§ Have indigenous IP for new energy and renewable energy equipment and energy storage devices to have over 80% of the market.
§ Power transmission output value reach RMB 3 billion;
§ Create a China-led international standard system for ultra-high voltage power transmission complete equipment;
more of the domestic market;
§ Power transmission complete equipment export proportion over 20%;
§ Ultra-high voltage power transmission
technology is a global leader, enter into ranks of global powerhouses.
more of the domestic market;
§ Power transmission complete equipment export proportion over 25%;
§ Product reliability and technological specifications to reach international advanced levels.
Agricultural machinery and
equipment
§ Agricultural machinery industry total output value to reach RMB 600 billion,
§ Domestic production of agricultural machinery products to reach over 90% of the market,
§ Large- scale tractors with over 200 horsepower, cotton picker machines, and other high-end products are about 30% of market.
§ Industrialize variable application technology, effective use of fertilizer and pesticide reaches 40%.
§ Control core parts manufacturing and reliable key technologies,
§ MTBF for tractors and combine harvesters increased to 250 hours and 60 hours respectively.
§ A full range of agricultural equipment for the production of bulk grain and strategic economic crops, a clear increase in agricultural equipment information collection
§ Intelligent decision-making, and precision work, and create a plan for the informatization of agricultural production.
§ Agricultural machinery industry total output value reaches RMB 800 billion,
§ Domestic production of agricultural machinery products to reach over 95% of the market,
§ Large-scale tractors with over 200 horsepower, cotton picker machines, and other high-end products are about 60% of market.
§ Smart seeding and fertilizing, plant protection, harvesting machinery, effective use of fertilizer and pesticide reaches more 50%.
§ Comprehensively grasp core equipment manufacturing and machine reliability of key technologies,
§ MTBF for tractors and combine harvesters
increased to 350 hours and 100 hours respectively.
New materials § Reach effective control over the entire scale of the basic material industry,
§ See initial results from adjustment to the industry structure,
§ Achieve self-sufficiency of advanced basic materials and form some export capability.
§ Achieve industrialization and application
§ Industry structure is noticeably adjusted,
§ Adjustment to basic material products achieves upgrades and replacements
§ Have over 90% of the domestic market.
§ Basically, solve the problem of restrictions on strategic materials for important areas of high-end manufacturing,
§ Effectively resolve urgent needs in next generation information technology, high-end equipment manufacturing, and other strategic emerging industries,
§ Critical strategic materials exceed 70% of domestic market;
§ Begin to create joint upstream and downstream innovation of strategic new materials,
§ Accumulate a number of cutting-edge core technology patents,
§ Some products achieve scale production,
§ Achieve application demonstration in key areas.
§ Some products enter into global supply system, key varieties fill the domestic void, achieve an
indigenous IP system.
§ Achieve effective layout of cutting-edge materials technology, standards and patents;
§ Cutting-edge materials achieve important breakthrough and achieves applications of scale, some areas achieve global leading standards.
Biomedicine and high-performance medical devices
§ Promote a large number of enterprises to achieve drug quality standards and systems that are in line with international standards,
§ At least 100 pharmaceutical enterprises obtain U.S., EU, Japanese, World Health Organization authentication and achieve product export;
§ According to international drug standards, develop and promote 10-20 chemical drugs and high-end drugs,
§ 3-5 new traditional Chinese medicines,
§ 3-5 new biotech drugs complete drug registration in Europe, U.S. and other developed nations,
§ Speed up the development of internationalization of domestically produced drugs.
§ Before 2020 when international patents for blockbuster drugs expire, achieve over 90%
generic production.
§ Achieve breakthroughs for 10-15 important core and critical technologies; begin to establish national drug innovation system and innovation team.
§ Annual manufacturing scale of high-performance medical devices reaches 600 billion;
§ By 2025, basically achieve drug quality standards and systems that are in line with international standards;
§ Develop chemical drugs, traditional Chinese medicine, biotech drugs focused on 10 major diseases,
§ Achieve industrialization of 20-30 innovative new drugs;
§ 5-10 drugs with indigenous property rights receive U.S. Food and Drug Administration or EU
authentication, and enter the international market;
§ Construct, improve, and support the national drug innovation system for external services, form of high-level innovation team with an international perspective,
§ Promote China’s drug internationalization development strategy.
§ Annual manufacturing scale of high-end medical device reaches 1.2 trillion;
§ County-level hospitals domestically produced mid- and high-level medical equipment reach a 70% rate;
§ Domestic production of core parts reaches 80% of the domestic market;
§ Build 10 or more platforms and joint innovation
50% rate;
§ Domestic production of core high-end medical device parts reaches 60% of the domestic market;
§ Build 5 or more platforms and joint innovation centres for construction of scientific and technological achievements;
§ Form 20 demonstration and application bases;
§ Form 3 or more internationally recognized brands.
technological achievements;
§ Form 6 province-level industrial clusters with output value of hundreds of billions of RMB;
§ Form 30 demonstration and application bases;
§ In all major product areas form 5 or more internationally recognized brands.
8.3 IP’s of the ‘four tigers’:
Taiwan In the 1950s and 1960s, the IP of the Taiwanese government mainly focused on the labour-intensive light industries (Nolan, 2001, p. 12). In that period, import-substitution and export promotion were the main policy instruments adopted. In the 1970s the government turned to more heavy industry, such as steel, oil refining, shipbuilding and electricity generation (Nolan, 2001, p. 12). The government extensively operated vital upstream industries and through the use of different IP-instruments such as import controls, tariffs, local content requirements, entry requirements, and concessional credit schemes, the government was constantly pushing and assisting the private sector into further technological advancement (Nolan, 2001, p. 12). Already by the 1980s, 75 percent of Taiwan’s exports were made of high and mid-tech products, and more than half were technology-intensive products (Nolan, 2001, p. 12). Following that, the government’s policies shifted towards more indirect support, and subsequent widespread privatization. But even then, the government was still highly involved in further advancing into higher value-added activities (Nolan, 2001, p. 12). For instance, it established the Hsinchu Science Park and provided tax benefits for investments in high-technology industries and by the mid 1980s, the park accounted for 60% of total R&D expenditure in Taiwan (Nolan, 2001, p. 12). Taiwan relied on a combination of SME’s and large scale enterprises which in a ‘cluster-like’ industrial structure resulted in high operational efficiencies (Nolan, 2001, p. 12). Taiwan’s large-scale firms (defined as firms with more than 500 employees) accounted for 58 percent of manufacturing value-added in 1970 and in 1979 the top 100 firms in Taiwan made up 44 percent of the total private manufacturing assets (Nolan, 2001, p. 12).
In 2001, Taiwan had 26 of the top 100 firms in the Asia-Pacific region excluding Japan, ranked by market capitalization (Nolan, 2001, p. 12).
South Korea In 1961 South Korea were one of the poorest countries in the world (Witt &
Redding, 2014, p. 217) . Around a generation later, in 1996, it attained OECD membership and had reached high-income country GDP per capita levels (Witt &
Redding, 2014, p. 217). The South Korean developmental state and the role of big businesses were central to the catch-up process in South Korea (Nolan, 2001, p.
13). Like the importance of keiretsus to Japan, South Korea relied heavily on chaebols, a large family-owned business conglomerate (Nolan, 2001, p. 13). The state supported the chaebols with preferential low interest credit loans from the state-owned banking system, and protected the domestic market through import substitution (Nolan, 2001, p. 13). Like in Japan, large oligopolistic firms played an important role, and the state made sure that collusion was avoided by only providing subsidies after strict performance goals were met (Nolan, 2001, p. 13).
Infant industry protection was heavily practiced to nurture the domestic firms and avoid, and long-term support was provided until the firms had become internationally competitive, which also made it possible for the firms to make long-term investment plans (Nolan, 2001, p. 13). After the businesses had become firmly established domestically, the state required success and market share increases in export markets as a condition for continual support and subsidies (Nolan, 2001, p. 13). This both earned foreign currency to South Korea, and exposed the businesses to international competition, pushing them to constantly improve products (Witt & Redding, 2014, p. 217). During the industrialisation period the South Korean state was responsible for initiating every major industrial diversification in the 1960s and 1970s, as well as pushing for heavy machinery and chemicals by the late 1970s (Nolan, 2001, p. 13). The chaebols were core to the economic development experienced by South Korea from 1960-1980 (Nolan, 2001, p. 14). Having 35 of the top 200 largest industrial enterprises in developing countries in 1985, South Korea had a central position in international competition (Nolan, 2001, p. 14). Today, South Korea is a highly advanced, technology-driven economy which has the largest share of robots per worker in the world – 631 robots per 10,000 workers in 2018 according to the International Federation of Robotics – and with household company names such as Samsung, Hyundai and LG Electronics (International Federation of Robotics, 2018).
Singapore After becoming independent in 1965, Singapore began to implement export-oriented developmental state policies largely similar to those of Taiwan and South Korea (Witt & Redding, 2014, p. 193). The government in Singapore was sceptical of the abilities of entrepreneurs to build up internationally competitive firms and it therefore focused heavily on attracting investment from corporations by applying
a foreign capital-dependent development strategy (Nolan, 2001, p. 14). The government selected foreign companies that were technologically advanced and had long-term investment ambitions (Nolan, 2001, p. 14). While foreign capital was important, Singapore also focused on developing a strong group of indigenous, large firms (Nolan, 2001, p. 14).
Hong Kong For neoclassical economists, Hong Kong is the ideal-type of an economy which was able to develop through free market competition and small competitive firms (Nolan, 2001, p. 14). Due to numerous favourable conditions such as an optimal location, a strong entrepreneurial tradition, and benefits from trade and investment in mainland China, Hong Kong was able to develop powerful domestic firms (Nolan, 2001, p. 14). In 2000, Hong Kong was home to seven of the fifteen largest companies in the Asia-Pacific region excluding Japan (Nolan, 2001, p. 14). Even in Hong Kong, large firms had an important role to play in the country’s economic development, even though the neoclassical view often attaches low priority to this fact (Nolan, 2001, p. 15).